Brazil

Index:

PEOPLE AND HISTORY

Brazil is a federal republic with 26 states and a federal district. The 1988 constitution grants broad powers to the federal government, made up of executive, legislative, and judicial branches. The president holds office for four years, with the right to re-election for an additional four-year term, and appoints his own cabinet. There are 81 senators, three for each state and the Federal District, and 513 deputies. Senate terms are eight years, staggered so that two-thirds of the upper house is up for election at one time and one-third four years later. Chamber terms are four years, with elections based on a complex system of proportional representation by states. Each state is eligible for a minimum of eight seats; the largest state delegation (Sao Paulo's) is capped at 70 seats. This system is weighted in favor of geographically large but sparsely populated states.

Fifteen political parties are represented in Congress. Since it is common for politicians to switch parties, the proportion of congressional seats held by particular parties changes regularly. The major political parties are:

Workers' Party (PT-center-left)

Liberal Front Party (PFL-right)

Brazilian Democratic Movement Party (PMDB-center)

Brazilian Social Democratic Party (PSDB-center-left)

Progressive Party (PP-right)

Brazilian Labor Party (PTB-center-right)

Liberal Party (PL-center-right)

Brazilian Socialist Party (PSB-left)

Popular Socialist Party (PPS-left)

Democratic Labor Party (PDT-left)

Communist Party of Brazil (PCdoB-left)

Socialism and Liberty Party (PSOL-left)

President Lula was re-elected October 29, 2006 in a second round victory with over sixty percent of the vote, over Geraldo Alckmin of the PSDB. Lula’s PT party failed to win a majority in either the lower or upper houses in concurrent legislative elections and will be obliged to form a coalition with the centrist PMDB party -- which won the most seats in the lower house and may end up with the largest number in the Senate -- and a collection of minor parties. However, party loyalty is weak in Brazil, and it is common for politicians to switch parties, changing the balance of power in Congress. The PT won five of twenty-seven governorships, but the opposition PSDB remains in control of the critical states of Sao Paulo and Minas Gerais. The PMDB, as in the legislative elections, won the most governorships of any one party, controlling seven states. Because of the mandatory revenue allocation to states and municipalities provided for in the 1988 constitution, Brazilian governors and mayors have exercised considerable power since 1989.

Lula’s electoral victory came despite a series of corruption scandals that resulted in the resignation of senior PT officials and the electoral defeat of several congressmen from parties allied to the PT. At least four congressional investigations are ongoing, though Lula has yet to be personally linked to any of the scandals.

Chief of State and Cabinet MembersPresident--Luiz Inacio Lula da SilvaVice President--Jose Alencar Gomes da SilvaMinister of Defense--Nelson JobimMinister of Finance--Guido MantegaMinister of Foreign Affairs--Celso AmorimMinister of Development, Industry & Trade--Miguel Jorge FilhoAmbassador to the United States--Antonio PatriotaAmbassador to the United Nations--Ronaldo SardenbergAmbassador to the OAS--Osmar Vladimir Chohfi

Brazil maintains an embassy in the United States at 3006 Massachusetts Avenue NW, Washington, DC 20008 (tel. 202-238-2700). Brazil has consulates general in New York, Chicago, and Los Angeles, and consulates in Miami, Houston, Boston, and San Francisco.

ECONOMY

President Lula has made economic growth and poverty alleviation top priorities. Export promotion is a main component in plans to generate growth and reduce what is seen as a vulnerability to international financial market gyrations. To increase exports, the government is seeking access to foreign markets through trade negotiations and increased export promotion as well as government financing for exports.

To increase its international profile (both economically and politically), the Lula administration is seeking expanded trade ties with developing countries, as well as a strengthening of the Mercosul (Mercosur in Spanish) customs union with Uruguay, Paraguay and Argentina. In 2004, Mercosul concluded free trade agreements with Colombia, Ecuador, Venezuela and Peru, adding to its existing agreements with Chile and Bolivia to establish a commercial base for the newly-launched South American Community of Nations. Mercosul is pursuing free trade negotiations with Mexico and Canada and has resumed trade negotiations with the EU. The trade bloc also plans to launch trilateral free trade negotiations with India and South Africa, building on partial trade liberalization agreements concluded with these countries in 2004. In July 2006, Venezuela was admitted to the trade bloc as a full member China has increased its importance as an export market for Brazilian soy, iron ore and steel, becoming Brazil's fourth largest trading partner and a potential source of investment.

Reform AgendaIn 2003, Congress passed Lula's key reforms of the public sector pension system and the tax code. The 2004 legislative season was not very productive, in part because of a political scandal early in the year followed by campaigning for the October municipal elections. In December 2004, several key bills passed into law, including a reform of the judicial system, a modern bankruptcy law, and Public Private Partnerships to fund infrastructure projects. In March 2005, a law to legalize biotechnology crops and stem cell research passed. The domestic political scandal, which surfaced in June 2005 and led to multiple congressional investigations, sidetracked most reform legislation for the remainder of the 2005 and 2006 sessions.

AgricultureAgriculture is a major sector of the Brazilian economy, and is key for economic growth and foreign exchange. Agriculture accounts for 8% of GDP (30% when including agribusiness) and 40% of Brazilian exports. Brazil enjoyed a positive agricultural trade balance of $43 billion in 2006. Brazil is the world's largest producer of sugar cane, coffee, tropical fruits, frozen concentrated orange juice (FCOJ), and has the world's largest commercial cattle herd (50% larger than the U.S.) at 170 million head. Brazil is also an important producer of soybeans (second to the United States), corn, cotton, cocoa, tobacco, and forest products. The remainder of agricultural output is in the livestock sector, mainly the production of beef and poultry (second to the United States), pork, milk, and seafood.

Other AspectsForests cover half of Brazil, with the largest rain forest in the world located in the Amazon Basin. Recent migrations into the Amazon and large-scale burning of forest areas have brought international attention. The government has reduced incentives for such activity and is implementing an ambitious environmental plan that includes an Environmental Crimes Law with serious penalties for infractions.

Brazil has one of the most advanced industrial sectors in Latin America. Accounting for one-third of GDP, Brazil's diverse industries range from automobiles and parts, other machinery and equipment, steel, textiles, shoes, cement, lumber, iron ore, tin, and petrochemicals, to computers, aircraft, and consumer durables. Most major automobile producers have established production facilities in Brazil.

Brazil has a diverse and sophisticated services industry as well. Mail and telecommunications are the largest, followed by banking, energy, commerce, and computing. During the 1990s, Brazil's financial services industry underwent a major overhaul and is relatively sound. The financial sector provides local firms a wide range of financial products. The largest financial firms are Brazilian (and the two largest banks are government-owned), but U.S. and other foreign firms have an important share of the market.

Privatization triggered a flood of investors after 1996. The yearly investment average in the telecom sector the 4 years prior to the start of privatization was R$5.8 billion, and the annual average for the four years following privatization was R$16.3 billion, nearly tripling. Investment in the electrical power sector increased from R$5.3 billion annually in the pre-privatization era to R$7.2 billion. U.S. companies provided a great deal of this influx of cash. After 2000, many of these investors suffered huge losses in the face of adverse regulatory decisions and especially the sharp depreciation of the real. The energy sector was especially hard hit.

In 2001, Brazil experienced an electricity crisis due to inadequate rainfall for its hydroelectric system and insufficient new investment in the sector. Mandatory rationing and price hikes were sufficient to prevent blackouts. The rationing system officially ended on March 1, 2002. Lula’s then-Energy Minister unveiled an energy plan in July 2003, which left many vital details undefined and most investors dissatisfied.

The Government of Brazil has undertaken an ambitious program to reduce dependence on imported oil. In the mid-1980s, imports accounted for more than 70% of Brazil's oil and derivatives needs; the net figure is nearing zero. Brazil is expected to become a net exporter of oil in 2007 as output from the Campos Basin continues to increase. Brazil is one of the world's leading producers of hydroelectric power. Of its total installed electricity-generation capacity of 90,000 megawatts, hydropower accounts for 66,000 megawatts (74%).

Proven mineral resources are extensive. Large iron and manganese reserves are important sources of industrial raw materials and export earnings. Deposits of nickel, tin, chromite, bauxite, beryllium, copper, lead, tungsten, zinc, gold, and other minerals are exploited. High-quality, coking-grade coal required in the steel industry is in short supply.

FOREIGN RELATIONS

The United States was the first country to recognize Brazil's independence in 1822. The two countries have traditionally enjoyed friendly, active relations encompassing a broad political and economic agenda.

The relationship between Brazil and the U.S. strengthened with the inauguration of Brazil's internationally oriented, reformist President Fernando Henrique Cardoso in 1995. President Bush invited then President-elect Lula to Washington for a meeting in December 2002. President Lula again visited Washington for a summit on June 20, 2003. Documents covering the results of the summit can be found on the White House and
State Department web sites. Deepening U.S.-Brazil engagement and cooperation are reflected in the continuing high-level contacts between the two governments, including reciprocal visits by Presidents Bush and Lula in March 2007 (see
Joint Statement) and President Bush’s visit to Brazil in November 2005 (see Joint Statement).

Ongoing topics of discussion and cooperation include trade and finance; hemispheric economic integration; Free Trade Area of the Americas; regional security; nonproliferation and arms control; human rights and trafficking in persons; international crime, including financial support to terrorist groups; counter-narcotics; and environmental issues. Existing bilateral agreements include an Education Partnership Agreement, which enhances and expands cooperative initiatives in such areas as standards-based education reform, use of technology, and professional development of teachers; a Mutual Legal Assistance treaty--ratified in 2001; and agreements on cooperation in energy, the environment, science & technology, and transportation. In March 2007, the United States and Brazil signed three separate memoranda of understanding to increase cooperation on biofuels (
MOU text;
fact sheet), education (
MOU text;
media note) and legislative capacity building in Guinea-Bissau (
MOU media note).

U.S. Embassy and Consulate FunctionsThe U.S. embassy and consulates in Brazil provide a wide range of services to U.S. citizens and business. Political, economic, and science officers deal directly with the Brazilian Government in advancing U.S. interests but also are available to brief U.S. citizens on general conditions in the country. Attachés from the U.S. Commercial Service and Foreign Agriculture Service work closely with hundreds of U.S. companies that maintain offices in Brazil. These officers provide information on Brazilian trade and industry regulations and administer several programs to aid U.S. companies starting or maintaining business ventures in Brazil. The number of trade events and U.S. companies traveling to Brazil to participate in U.S. Commercial Service and Foreign Agriculture Service programs has tripled over the last three years.

The consular section of the embassy provides vital services to the estimated 60,000 U.S. citizens residing in Brazil. Among other services, the consular section assists Americans who wish to participate in U.S. elections while abroad and provides U.S. tax information. Besides the U.S. residents living in Brazil, some 150,000 U.S. citizens visit annually. The consular section offers passport and emergency services to U.S. tourists as needed during their stay in Brazil.

U.S. consulates general are in Rio de Janeiro and Sao Paulo, and a consulate is in Recife. Consular agents are located in Manaus, Belem, Salvador, Fortaleza, and Porto Alegre. Branch offices of the U.S. Foreign Commercial Services are located in Brasilia, Sao Paulo, Rio de Janeiro, and Belo Horizonte.

Other Business ContactsU.S. Department of CommerceOffice of Latin America and the CaribbeanInternational Trade Administration14th and Constitution Avenue, NWWashington, DC 20230Tel: 202-482-04281-800-U.S.A-TRADEFax: 202-482-4157Automated fax service for trade-related info: 202-482-4464

TRAVEL AND BUSINESS INFORMATIONThe U.S. Department of State's Consular Information Program advises Americans traveling and residing abroad through Consular Information Sheets, Public Announcements, and Travel Warnings. Consular Information Sheets exist for all countries and include information on entry and exit requirements, currency regulations, health conditions, safety and security, crime, political disturbances, and the addresses of the U.S. embassies and consulates abroad. Public Announcements are issued to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country because the situation is dangerous or unstable.

The Department of State encourages all U.S citizens traveling or residing abroad to register via the State Department's travel registration website or at the nearest U.S. embassy or consulate abroad. Registration will make your presence and whereabouts known in case it is necessary to contact you in an emergency and will enable you to receive up-to-date information on security conditions.

Emergency information concerning Americans traveling abroad may be obtained by calling 1-888-407-4747 toll free in the U.S. and Canada or the regular toll line 1-202-501-4444 for callers outside the U.S. and Canada.

The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 7:00 a.m. to 12:00 midnight, Eastern Time, excluding federal holidays.

Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled "Health Information for International Travel" (HHS publication number CDC-95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800.

Further Electronic InformationDepartment of State Web Site. Available on the Internet at
http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including
Background Notes and
daily press briefings along with the directory of
key officers of Foreign Service posts and more. The Overseas Security Advisory Council (OSAC) provides security information and regional news that impact U.S. companies working abroad through its website http://www.osac.gov

Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more.

STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.